Illinois Treasurer Frerichs touts Secure Choice in Alton visit

Through a new initiative, Frerichs has taken an interest in more Illinois residents keeping more of their money safe as well.

Frerichs was in the Riverbend Thursday morning touting Secure Choice, a program administered by the Illinois State Treasurer’s Office that will help an estimated 1.2 million Illinois workers not currently saving money for retirement through an employer-offered plan put away some money for their golden years.

Frerichs said the idea came about as a way to combat a growing trend of adults and seniors entering retirement years with little or no savings. Nearly half of working-age adults, according to Frerichs, have less than $5,000 saved for retirement, and about one-third of retirees in America rely on Social Security for 90 percent or more of their retirement income, two statistics that impact not just those affected, but everyone, he said.

“We as sympathetic human beings should feel bad about those people who are not going to be able to enjoy their golden years, are not going to be able to have a retirement with dignity. But also, when those people retire without a good source of income, their spending drops off considerably. When their spending drops off, it hurts our local economy. And, if they start accessing state services earlier, that costs all of us,” Frerichs said. “So we all have a shared interest in making sure people are saving for retirement.”

The program will only be offered to individuals not currently offered a retirement savings option through their employer. Employers won’t have any financial obligation, but failure to enroll when prompted could result in fines and penalties.

A seven-person board will oversee the program, but investment management and administrative services will be contracted out to a third-party provider through competitive bidding processes, Frerichs said. The program is not connected to the state’s pension system, and the state does not make any contribution or have any financial obligations related to Secure Choice.

The program will be rolled out in waves. The pilot phase began in May, and employers with 500-plus employees will be enrolled starting in November. From there, the second wave, in July 2019, will include employers with 100 to 499 employees, and the final stage will take place in November 2019 and include employers with 25 to 99 employees. Frerichs said if the program is a hit and more employers and employees inquire about participating, they may pursue expanding the program down the road.

Employees will have the option to opt out of the program if desired, Frerichs said, but he expressed hope that getting people enrolled will be the positive momentum they need to start saving for retirement.

“One of the most powerful forces in the universe is inertia — once something is set in motion, it tends to continue in motion. Once you sign up for an account where it’s automatically deduced, people don’t change very easily,” Frerichs said. “And the opposite is true — if it hasn’t started, it’s difficult to get it moving.

“Once you get in a habit they continue, but it’s tough to start a new habit. And so, we think the answer is to make sure more people have workplace retirement savings options with automatic payroll deduction. And that’s what Illinois Secure Choice is.”